Electronic Arts cuts sales outlook on Xbox sales

IanSherr

Electronic Arts Inc.'s fiscal third-quarter revenue fell 12%, with a wider net loss, following a steeper-than-expected drop in sales of games for older videogame consoles.

The Redwood City, Calif., videogame company on Tuesday also lowered its fiscal year revenue projections to $3.52 billion, from the $3.55 billion it projected in October. Factoring in items such as deferred revenue, EA said it now expects $3.91 billion in sales, down from an earlier projection of $4 billion.

Blake Jorgensen, EA's chief financial officer, said EA was surprised by how quickly sales of games for aging Microsoft Xbox 360 and Sony PlayStation 3 consoles dropped, taking about $75 million of the company's expected results during the holiday shopping season, and another $25 million off the company's guidance for the current quarter.

The prior guidance was based on a belief that current-generation product sales "would hold up longer, at least through the holiday season, than it did," Mr. Jorgensen said. He cited market research firm NPD, which said older console games dropped about 35% in December, a data point he said EA's results roughly mirrored. But, he said, sales of games for older consoles haven't come to a screeching halt.

The drop off weighed heavily on EA's fiscal third quarter, ended Dec. 31, during which the company counted net revenue of $808 million, down more than 12% from the $922 million it reported for the same period a year prior. EA's net loss widened to $308 million from $45 million a year prior.

Adjusting for items such as deferred revenue, EA said it tallied about $1.6 billion in sales, up 33% from nearly $1.2 billion a year prior. Profit also jumped to $1.26 a share, more than double the 57 cents reported last year.

For the current quarter, EA said it expects adjusted profit of nine cents a share on sales of $800 million. Analysts on average had expected earnings of 10 cents a share on about $827 million in revenue, according to Thomson Reuters.

For the year, EA said it expects adjusted profit of $1.30 a share, slightly above analyst expectations of $1.28 a share.

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